[toomuchtodo]

It would be helpful to explain how an early employee (whether still employed or separated from the company) is able to obtain the following documentation from their company to demonstrate QSBS treatment to the IRS (or if a letter indicating such from a finance department or the CFO would suffice):

> Even though reporting QSBS is simple, you should still keep financial statements and other supporting documents to support your claim. Detailed balance sheets for the company from its incorporation through the close of your investment will show if it has more than $50 million in aggregate gross assets. Equity documents (type, date, etc.) are also important to demonstrate that your investment qualifies. [1]

[1] https://withcompound.com/manual-company-equity/qsbs

[Dwolb]

If you’re up for QSBS treatment, I’d recommend to hire a CPA, financial advisor, and possibly a lawyer.

One of those three can send over a letter to the CEO or CFO to share relevant information. It’s usually already prepared for equity or debt financing rounds and possibly periodic reporting.

[toomuchtodo]

Appreciate the advice. Are there cut offs similar to an 83b election? Or can QSBS still apply if you're near the end of the five year wait period and you took no action at grant and exercise events (besides what you normally might for an ISO grant)? Asking so I'm not wasting the time of the involved.

[Dwolb]

I need to say the obligatory THIS IS NOT FINANCIAL ADVICE CONSULT A TAX ACCOUNTANT.

Ok so my understanding is you need to exercise your options and wait 5 years for QSBS to kick in. After that you can start selling at $0 in capital gains.

Just a heads up though, this tax treatment may get closed soon with upcoming federal legislation. May not apply to shares exercised prior to the legislation being enacted though.

Note: here are some people who talk about QSBS as well https://www.mossadams.com/articles/2021/04/qualified-small-b...

[toomuchtodo]

No worries, understood, hold harmless and all that jazz. Thank you for the time and the info.

[Dwolb]

Yup, good luck.

[toast0]

83b has reporting requirements (you've got to send it in within x days of exercise and again with your 1040 for that tax year, although the second one is maybe not super required: regulations say you must send it, but I think there's rulings that say otherwise), but QSBS doesn't really: you just say some of your capital gains (more or less) don't count on the QSBS form. Only if you're audited do you provide documentation.

[ganoushoreilly]

This is a good point. A lot of founders seem to want to protect or hide this information. Usually that's a red flag for me, but it's common. I think it needs to me more normalized and formalized.